Member Info for tedmak

Gubby,
The price AA buys the coal from TNG is linked to index prices. Nothing unusual.
From that price is taken the market fee.

From the Pre-listing statement, the following was mentioned wrt tthe Offtake agreement with AngloAmerican

The price to be paid by AAML for the export coal supplied by the Group will be determined in accordance with an agreed formula, linked to index prices, taking into consideration the quality of the export coal supplied (including branded products) less a market related marketing fee.

The marketing fee, I assume, is fixed to acoount for the costs to AA of proving the service. Thus, as the price goes up, the fee take less proportionately from the coal price, hence the discount reduces.

In the half year results, the company said that the current discount is less than 20%. As forward prices for 2022 are higher than they were for H! 2021, I am assuming the discount for 2022 is less than 20% also.
That is my ASSUMPTION, nothing more nor less.

Share price is up over one week
FTSE 100 is down over one week
FTSE 250 is up over one week
Underlying commodity is up over one week.

I try (don’t always achieve) to look at the big picture and the important thing here IS the big picture. The big picture is that the stock is showing strength.
Actions of individual actors (there aren’t enough of them yet in this stock) and the mysticism about market makers don’t really get us anywhere.

Just my humble opinion.

I am a commodity trader.
If you want a like it is the theice

https://www.theice.com/products/241/API4-Richards-Bay-Coal-Futures/data?marketId=5161304&span=1

Prices are on delay, and, due to API4 not being the most liquid of the contracts, can be difficult to monitor except on a day by day basis.

As you can see - the Q421 price rose today.

Looks like some of the people who have piled into Thungela in the last couple of weeks have got a bit nervous about a few pence fall.
Is what it is. Not seeing anything to worry about.

A thing to watch, however, is the ZAR. If it rises, it raises Thungela's costs.
Nothing to worry about regarding the movements in ZAR over the last couple of months, but one to watch.

We could really do with a market update so that people could understand a bit more about what is going on.
The difference between the coal price in May and where it is now is night and day.

Also - can we try to avoid personal insults on this board? We seem to have gone from weeks of bugger all discussion, to loads of discussion. Some good and detailed, some discussing comments on other boards.
It really varies from stockboard to stockboard.

Trying to compare Thungela to other coal companies (pure play)

I found this list.

https://blog.bizvibe.com/blog/largest-coal-mining-companies-worldwide

Any other companies that are missed? (Only looking at pure plays, not diversified companies)

A couple of days ago someone on here complained that they have a crappy small allocation via the demerger process.
On the way up, this is helping holders because there is little volume able to sell.
There is a cognitive dissonance at work. The share holding is too small that it is not worth the cost to sell. I think some people are gradually flipping the logic that if it is no point to sell - then why not just buy?
It took me until the share price got to 210p before I crunched the numbers and bit the bullet.
At the start of the year if someone has said to me that my biggest stockholding in 2021 would be a SA coal producer, I would have thought they had drunk too much cooking sherry.

Just to wrap up this thread.
I received a reply from investor relations:

Good day X
 
Thank you for your mail.
 
With regard to your question below, royalties do not form part of the discount.
The discount to the Benchmark price consists of three elements:
* Linear calorific discount
* Product quality discount
* Marketing margin
 
More detail on these elements can be found on page 22 of the Capital Markets Day presentation.
 
Thanks and kind regards

Hope that wraps this whole thread up.

Ignore that

in the example, I mentioned it would be

50 divided by (9*100) PLUS 0.5 =10.5%

All multiplied by 100 (sales) so 10.5.

It would make sense that this number be taken off EBIT before application of corporation tax.

So that would make the assessed profit for corporation tax - 39.5 (50 minus 10.5).
Corporation tax at 28% - 11.06

So profit after taxes - 28.44

This process has allowed me to complete my spreadsheet. Thanks for any replies to my original.

Thanks
Can you find any worked examples?
If the revenues are 100, costs are 50 so the EBIT is 50.
The royalty is 7% on the 50?

I can’t see that - can you send a screenshot of what it refers to.

Gubby
thanks. I found that but it stated royalties at 40M rand in the interim results.
That is way too low considering revenues were over 10000M rand. I can only think that 'royalty' as mentioned there is for part ownership of a mine or something.
In the May presentation, the 'other cash costs' number is similarly too low.
I suspect the number for the mining tax is somewhere in 'taxes' or wrapped up in the discount.

I have emailed investor relations to get a more specific answer.

It would have been simpler if the demerger was done at a financial end point (end June or end Dec). The numbers from the presentations have too much crossover with inter-company debts and restructuring and the investor presentation numbers are not all IFRS (not suggesting there is anything wrong with them, just that they can be unclear).
(We wouldn't be having this exchange if they WERE clear).

What can be said for certain, however, is that the cash position at end of June (over 3000M rand) covers the outstanding obligation for the company closure costs and environmental remediation.
The company is also throwing off cash at current prices and for the 2022 forward curve.

Thanks, Gubby
I was referring to the mining royalty paid to the government.
See the attached.

https://www.lexology.com/library/detail.aspx?g=367d51e8-b543-4970-ac8b-b43a5b391f6e

Ignore my 11%. It looks like the correct number for the mining royalty is 7%, as the mining is unrefined.
In the presentation from May, they mention the discount but royalties are not mentioned.
Now if it is all wrapped up in the 'discount', it could make sense as the mining royalty number is less than 26%.

Where I am not clear is that the page you refer to leads to an EBITDA number. Now I PRESUME the T in EBITDA is corporation tax, not royalties.
But assumptions are not the best thing to rely on.

In the roadshow presentation from May, the company highlighted that the product realises a price discounted to API4 of 26% (eoughly).
Does this include the 11% royalty that has to be paid or is the rolyaty applied to the discounted price?
There is a discount anyway due to the lower calorific value the coal to that in the Richards Bay standard.
Any informative response welcome.

There is an opportunity now to get in because there isn’t a wide number of investment firms publishing research.
The stock is probably not being seen on the radar of a number of funds and a number of the Companies that inherited the stock of the demerger will have sold straight away as coal production is not consistent with ESG.
The sheer speed of the moves over the last month indicate a lack of owners with ability to sell.
Have been buying from 210 to 263

If this had still been in AAL, it would have been responsible for a 13p price rise in a 2500 to 3500 pence stock.
It wouldn't have even been perceptible.
Begs the question with all of this move to divest positive carbon companies, other babies will be thrown out with the bathwater.
(Not that am complaining about the move by AAL, it was divested to the shareholders for them to make the decision on what carbon exposure they want. Better than just flogging it to someone else.)

Excluding the ex-div factor, I have the price down 5% today.
I put it down to the lower Chilean output projection from Antafagasta.

Any other ideas?

I have had a look at coal prices (API4) for Jan and Dec 2022. The curve has increased by $27.8/tonne so I make it that, on 16MT of exports, 11% mining royalty and 28% corporation tax, the INCREASE since the demerger of the free cash flow for 2022 is 6.5B rand or 233p per share.
That is just for 2022 and ignoring anything for the remainder of this year.
There is obviously execution risk, and also the coal price could fall from current levels (it could also rise), but, for me, the margin of safety on this is fantastic.

Not the way it works.
The Ofgem price control works in a way that NG is not renumerated for encouraging energy consumption.
If the consumption is low in one year, the effective clawback comes in future years and vice versa).
The incentive is to enable supply and demand and the energy transition (links to offshore wind and interconnectors etc).

I stand corrected, PM.

I was actually born in Gateshead. My bad :-)

Excellent results indeed.

Hopefully we dont have to worry about tunnels and shafts in the East of England.

An excellent stock for now and providing the materials for the energy transition